WhiteHorse Finance (WHF) Q3 2024 earnings summary

Executive summary

• Q3 2024 results showed a decline in NAV per share to $12.77, down 5.1% sequentially, and net investment income of $9.2M, slightly below Q2 and Q3 2023 levels, with portfolio value at $654.3M across 73 companies.

• Net realized and unrealized losses totaled $16.0M, mainly from American Crafts ($6.6M) and Camarillo Fitness Holdings/Honors Holdings ($5.0M), with additional write-downs and restructurings.

• Net investment income exceeded the base dividend, and a $0.385/share distribution was declared for Q3 2024, along with a special $0.245/share distribution.

• The company is managed by H.I.G. WhiteHorse Advisers, leveraging a global platform and maintaining a joint venture (STRS JV) with STRS Ohio for diversification.

• Focus remains on senior secured loans, selective lending in less competitive segments, and rigorous underwriting standards.

Financial highlights

• Q3 2024 net investment income and core NII were $9.2M ($0.394/share), down from $9.3M ($0.40/share) in Q2 2024 and $10.8M in Q3 2023.

• NAV per share declined to $12.77 from $13.45 in Q2 2024 and $13.63 at year-end 2023, impacted by $16.0M in net losses.

• Total investment income for Q3 2024 was $22.9M, down from $23.5M in Q2 2024 and $25.9M in Q3 2023.

• Weighted average effective yield on income-producing debt was 10.6% at Q3 end, down from 13.1% in Q2 2024 and 12.4% at year-end 2023.

• Gross capital deployments were $51M, with $30.2M in repayments and sales, and $15.1M in assets transferred to STRS JV.

Outlook and guidance

• Management expects high repayment activity through year-end and into 2025, with modest deal volume in Q4 and a focus on non-sponsor deals for better risk-return.

• Pipeline remains active with 185 deals, but closing rates are uncertain; capital deployment will focus on new and existing investments.

• Risks from sustained high interest rates, inflation, and geopolitical events are highlighted.

• Emphasis on downside protection, cash flow visibility, and leveraging H.I.G. Capital’s expertise.